- By: Ramsay Woodcock (What Am I Missing?)
New regulations have been proposed that would read New York’s law against price gouging as recommending less strict enforcement against small firms than against larger firms. I’ve argued that this confuses scarcity with monopoly.
Price gouging is the exploitation of natural scarcity to charge higher prices. Monopoly is the creation of artificial scarcity, allowing for higher prices to be charged. Big firms have the power to create artificial scarcity. But all firms can take advantage of natural scarcity to rip the public off. So there’s no good reason to apply a more lenient price gouging standard to small firms.
It turns out that New York Attorney General Letitia James is not the first person to get the distinction between natural and artificial scarcity wrong.
Hapsburg Austria did too.
